What to Consider When Buying Income Properties Out of State
I am a real estate investor who owns investment properties in three states. Here’s what to consider when buying and managing properties out of state.
Sometimes you may find that the best deal on an amazing property is not located in a market that is close to you. This is what I discovered while living and working in Los Angeles. I loved the look and feel of vacation style properties in mountain markets. It also didn’t hurt that the price points were much lower (at that time) than properties of similar style located close to me. I wondered if I could purchase one of these properties and how I could manage it from afar. I learned quickly that it is possible! Here are my recommendations for what to consider when purchasing properties out of state.
First, you must have a truly local team. This is very important for you to successfully acquire an investment property in your target market. Primarily, you want to ensure your real estate agent knows the local area (just because an agent is licensed in the whole state does not mean they know the whole state). Do some due diligence and upfront research to determine which agents know your targeted market best. While it isn’t necessary to have a local lender, it may make sense to pursue this as your best option based on the market nuances. It also helps if your agent and lender have worked together in the past, but it isn’t necessary.
Next, you must consider how you will successfully manage your property remotely. In most cases, I recommend having a full-service management team when you acquire out of state properties. It not only helps to give you a truly passive investment experience, but it also ensures your property is getting proper attention from boots on the ground. Most of the time your agent can recommend a property manager who is a well-respected expert in your area. It is possible to manage your property remotely if you have people in place to assist you when you cannot physically be present at your property.
Lastly, whether you choose to self-manage your property or not, it will help to have some independent contractors you trust to assist you along the way. These members of your team may help with a wide array of tasks ranging from unclogging a toilet to mowing lawns. I recommend working with either your property manager or your real estate agent to determine a short list of names to interview for the position.
As you can tell by my short list of recommendations the key to your success lies in the relationships you form with people. You will need to rely on a team to not only acquire your out of state property, but also to properly manage and care for your property as well.